Hollywood skirts disaster with short-term strike savings, steep cuts and austerity measures
By Cynthia Littleton
Hollywood’s season of strikes came at enormous cost to the entertainment industry. It came in projects that weren’t greenlighted, sleeper hits not realized, breakthrough gigs not booked and paychecks not earned.
But by the simple math of Hollywood’s true bottom line, there’s no other way to say it: The strikes waged by the Writers Guild of America and SAG-AFTRA were a short-term financial gift to studio conglomerates that had already been listing because of streaming losses. The dual strikes gave the studios cover to hit the reset button on business plans that had already been scaled back.
“In a weird way the strikes have been a mask for the deeper issues we’re struggling with — the costs of content, the quality of content and the eradication of several revenue streams,” says Jeremy Zimmer, CEO of United Talent Agency. “These are all real issues that need to be dealt with.”
Moody’s Investors Service estimates that the work stoppages will produce about $10 billion in additional free cash flow over a 12-month period across the largest conglomerates, notably Disney, Comcast, Warner Bros. Discovery, Paramount Global and Sony Corp. That’s an astounding figure, and one that underscores how much money Hollywood has committed to content production in recent years. The business has been on a bender, fueled by the availability of cheap debt and optimistic projections about the potential of fledgling streaming platforms.
But over the past 10 months, Disney and Warner Bros. Discovery alone have shed nearly 10,000 jobs and slashed billions of dollars in production and marketing costs. Disney originally forecast shelling out a little more than $30 billion on content (including sports rights) in fiscal 2023, which ended Sept. 30. But the Mouse’s actual 2023 number dropped to $27 billion after the strikes began and is projected by Disney to drop again to $25 billion in fiscal 2024. Moody’s estimates the total cost increase across all major studios from the three-year union contracts inked with the Directors Guild of America, WGA and SAG-AFTRA to be in the realm of $600 million a year.
After the WGA went on strike May 2, the pause in payments to talent and expenditures on scripted production gave studio executives time to reassess content strategies. Hollywood spent freely on made-for-streaming TV shows and movies in part because interest rates on debt were so low that it was easy to finance production with borrowed money. But the cost of servicing that debt has climbed sharply. So has the price of everything, from boom mics to production trailers.
As film and TV production lurches back into high gear this month, the business is already on a different course than it was before the writers went pencils down and the actors joined them on July 14 . The environment for the foreseeable future will be all business. Studio sources report that instead of the usual exodus around the winter holidays, a lot of soundstages and location shoots will be in full swing the day after Thanksgiving. Moreover, the deal-making environment is expected to be extremely “surgical,” in the words of a top studio executive. Instead of multimillion-dollar outlays on multiyear development deals, the focus will be on script sales, short-term talent holding deals and other project-by-project transactions.
Some see a wave of austerity coming to an industry known for its glamour and largesse. Neil Begley, senior VP of Moody’s, who covers Hollywood for the debt rating agencies, thinks the double whammy of the COVID shutdowns in 2020 and 2021 and the strikes will add up to long-term changes.
“We believe studios will look for cost savings that will not materially impair the volume of film and TV or the quality of storytelling that will be noticed by audiences,” Begley wrote in a research note on Nov. 10, two days after the SAG-AFTRA halted its strike. “We expect studios will trim their use of A-list talent, greenlight less filming on location and instead use more soundstages and green-screens, and that they will trim postproduction spending and special effects. We believe that there are significant opportunities to tighten the budget processes given well known industry excesses. The will of studio executives to do this exists, given the secular pressure on linear television distribution, thin margins in film and collective industry losses in streaming.”
As studios cut spending, they will also face newly activated union members who will look to enforce contracts and push hard for future gains. Zimmer notes that it took a dual strike and other industry turmoil to give SAG-AFTRA the leverage to land meaningful wage gains for the lowest-paid working actors for the first time in years. He sees it as a reflection of the nation’s larger macroeconomic struggle with the lopsided distribution of wealth as the divide between the 1% and everyone else grows.
“The wage gap is a fundamental problem in the United States,” Zimmer says. “It’s one of the roots of why there is so much strife in our country. We’re definitely in a period of time where labor unions are much more active. They’re trying to shrink the wage gap as it exists in our industry and as it exists in many industries.”
Moviegoers and TV lovers will feel the post-strike content slowdown
By Jennifer Maas, Joe Otterson and Rebecca Rubin
There will be blockbusters next summer — just not as many as studios had hoped. The same goes for new installments of shows like “Grey’s Anatomy,” “Law & Order: SVU,” “NCIS,” “9-1-1” and other scripted favorites.
After a double-whammy strike year that shuttered production for more than six months, moviegoers will feel the pinch next summer with a thinner-than-planned slate of big-budget sequels and superheroes. Studios have shuffled releases like Paramount’s “Mission: Impossible 8” to 2025, while bankable sequels, including Sony’s “Venom 3” and Barry Jenkins’ “Lion King” spinoff “Mufasa’s Kingdom” for Disney, have bolted out of popcorn season for November and December release dates, respectively.
TV series production plans have also been turned upside down by the strikes led by the Writers Guild of America and SAG-
AFTRA. Traditional network TV procedurals and comedies will likely be the first wave of fully scripted series to get up and running by year’s end.
In other words, Hollywood is getting back to work, but it’s far from back to normal. With the extended pause on production, some films simply couldn’t be completed by their original release dates. It’s a fate that big-budget movies face and one that could create a domino effect on the release calendar. With a logjam of projects that need reshoots and other tinkering, the post-strike scramble will soon reveal whether films like the “Mad Max” prequel “Furiosa” now set for release on May 24, and Universal’s disaster epic “Twisters” (July 19) will make it to the finish line as planned.
“Nothing about moviegoing is settled right now,” says David A. Gross, who runs the movie consulting firm Franchise Entertainment Research. “Scheduling bottlenecks and delays are coming. It’s going to take time to rebuild.”
On the small screen, where broadcast network schedules were heavily impacted, a clearer picture is finally emerging. CBS was first out of the gate, revealing premiere dates of new and returning scripted series that will keep the traditional TV season on schedule. Its comedies and dramas will air 10 to 13 episodes from February to May. The same will likely go for other broadcast networks.
Viewers might be frustrated that their shows have just come back, only to go away again three and a half months later, but broadcasters are avoiding robbing the 2024-25 season for what remains of 2023-24. They want to get back on schedule, and they want viewers to get back on their schedule too.
At streamers and premium cablers, sources say execs are discussing saving time and money by shooting back-to-back seasons of big-budget series. Good candidates for this treatment would be HBO’s “House of the Dragon,” Netflix’s “One Piece” and Amazon’s “The Lord of the Rings: The Rings of Power.” Another plus: It gives networks and streamers a stockpile of episodes and a better chance of premiering seasons at a pace that keeps fans happy.
Speaking of savings, consumers also can expect to see a dramatic drop in the volume of new shows arriving on streaming every week. Budgets are already falling as more companies embrace austerity programs to get through hard times.
The belt-tightening will be felt across television. Sources stress that expensive shows will still exist, but networks and studios are looking for series capable of sustaining long runs on a budget, namely sitcoms and procedural formats. In other words, programs like “Law & Order” and “It’s Always Sunny in Philadelphia” aren’t going anywhere just yet.
“You have to remember that ‘Game of Thrones’ wasn’t ‘Game of Thrones’ when it started,” one agency source says. “The show had a relatively small budget early on and then grew into what it became. Taking a flier on a brand-new show with a $100 million budget out of the gate can’t continue.”
Another new normal: your favorite TV shows and movies heading to different platforms. Insiders expect companies to continue licensing their shows and films to outside streamers in a way they haven’t been for the past few years. Recently, Warner Bros. Discovery has been putting certain HBO shows on Netflix — like “Insecure” and “Band of Brothers” — with several big DC titles like “The Batman” and “Wonder Woman” soon to follow suit. Disney CEO Bob Iger also hinted the Mouse House is “in discussion” to lend some of its titles to Netflix.
It’s a way for these companies to make some quick cash. But Iger, as well as Netflix movie chief Scott Stuber, have acknowledged a greater need to prioritize quality over quantity. What’s the point of endless streaming options if nobody wants to watch them?
“At the time the pandemic hit, we were leaning into a huge increase in how much we were making,” Iger said during Disney’s latest earnings call. “We lost some focus.”
Back then, Stuber recalled in a recent Variety interview, executives were asking themselves: “Do you have enough film and television on a basic business level?” Now, he says, “creativity needs momentum. We’re all hoping to get back to what we do together best — and that is to tell great stories.”
On the first day of the strike, maybe 15 minutes into my very first four-hour shift on the picket line, I said to myself, “I’m not gonna make it.”
I was remembering the last strike, in 2007. Back then, picketing had worn out its novelty pretty quick, and I was not looking forward to months and months of doing it again now. Plus, I was a strike captain, and when you volunteer for that position, “I’m not gonna make it” is not the attitude they’re looking for.
Anyway, on the first day of the strike, the guild called and said, “We need people at Fox at 4 a.m. to stop the trucks.” Whaaat? I had just walked 20,000 steps, so first of all, this was an ungodly turnaround time. And once again I was remembering the 2007 strike — back then, no trucks stopped, and everybody hated us.
But on the second day of the strike, I trudged over to Fox in the early morning to picket with … two other people. It was Pete Chiarelli, Peter Murrieta, myself and a monsoon. Yes, it was raining at 4 a.m. in Los Angeles, in May, because the universe had obviously decided, “Fuck Mike Royce.”
Soon, a couple of trucks showed up. The three of us splashed back and forth through the crosswalk with our makeshift signs, looking less like a picket line and more like some men of a certain age who got lost on their way home from their 100th Cheap Trick concert.
Then, instead of entering the lot, the trucks pulled to the side of the road. We could see the drivers calling somebody. So it all just seemed futile — obviously, they were going to enter the lot. What did the Teamsters owe us?
Then the trucks turned and, instead of crossing our motley little picket line, roared past the Fox entrance, leaning heavily on their horns in support: HONNNNNK! They disappeared down Pico.
The three of us stared at each other in disbelief. Did that really just happen? Then we cheered like maniacs and took pictures of each other like we were conquering heroes. What a moment! We weren’t just three sleepy dipshits with signs — we were a union, shown more power by a sister union.
That was when I said to myself, “Maybe I am gonna make it!”
Experiencing such visceral support from the Teamsters changed my whole mindset. Because now I knew that somebody had our back, and that our writers’ fight to protect and preserve our profession had very powerful allies. We, along with the directors and actors, get all the press, but the Teamsters run this town, along with IATSE, LIUNA and all the other crew unions who actually do the work that makes our work come to life.
If we were all going to row in the same direction, then maybe we writers could win this thing! From then on — led by an amazing guild staff and supported by our sister unions — picketing meant something: unity, solidarity and, eventually, victory.
Unlike 2007, it never got old. In fact, this time, picketing kept me going. Now, let me be clear: I didn’t want to go on strike, nor do I ever want to again. But going out every day to spend time with my union brothers and sisters, to wage our fight together, was something I’ll never forget.
I mean, we had no real choice but to strike. Yet the picket lines became a strange but unique opportunity to get to know the talented, interesting, kind, strong, funny people who, like all of us, chucked caution to the wind and followed their dream to the most dream-crushingest town in the world to try and create stuff for a living. These are people who understand why you do what you do on a level that no one else does. Sharing time and thousands of steps with them was an irreplaceable experience.
Let’s not do it again! Unless any of our sister unions have to strike to get what they need. In that case … I’m definitely gonna make it.
Mike Royce is co-creator of Netflix’s “One Day at a Time” and Max’s “Men of a Certain Age.”
I am relieved that the actors strike is finally over. It ended right as I was beginning to think that walking in circles on the Disney lot had become my new job. I had my uniform (thinking of you, SAG-AFTRA strike shirt and comfy sneaks), inside jokes with “co-workers,” and I knew when the good snacks arrived — thank you, Costco pizza! I even found a parking space hack that made late arrivals less of a nightmare: It’s the curve of a curb. No one realizes that if it’s not painted red, it’s actually a parking space!
Being on strike had become my new way of life. I was in a zone. I realized that as a picketer, I’m pretty quiet. I’m the kind that puts on sunscreen and headphones with some good R&B and just gets it done. Not exactly drudgery, thanks to the lively company, but not exactly fun either. I just never understood how we all found ourselves here. How was it that our needs had been so neglected? That question will probably always remain.
But if I’m honest, amid the horror of it all, my life also adjusted in some good ways. Because I wasn’t working, I had more time to spend with my dad (I’m his fulltime caretaker) and more time to give to the charities and initiatives I celebrate and support, like DonorsChoose, Emily’s List and the Motion Picture & Television Fund.
But throughout, I also felt an overwhelming sense of sadness for all the things we’ve lost. Some friends have lost their apartments, others their health care, and many their shows due to cancellation. A few have left the city and this business altogether. Like with the COVID pandemic, everybody lost something during the 118 days we fought for a fair contract.
Where do we go from here? Do we just go back to business as usual? Just smile and nod our way through an industry where the top doesn’t appear to care much about the bottom? That’s untenable to me. I want better for us.
I’ve always believed that either we all matter, or none of us do. And with that in mind, I hope the spirit of camaraderie we built walking the line will stay with us and that we remember that we are our brother’s and sister’s keeper — at least at our best, we are.
I want to be a part of an industry that takes care of its own in every way. That’s why I was marching with the WGA before we went on strike ourselves, and why I will be out there with IATSE if they end up needing our support. We’re better together. I hope that’s the lingering lesson for all of us.
My prayer is that as an industry we can figure out how to get some of the goodwill back. I hope we can.
As for me, I’m currently on the hunt for my next TV gig. Sadly, my show “Act Your Age” was a casualty of this weird season. It’s a cruel twist of fate not to be going back to set after this, because as a cast and crew, we became even closer while being on the strike lines together. That’s the irony of it all. For so many of us, it was not-working together for all those long hours that made the idea of working together again even more exciting.
Our brilliant “Act Your Age” showrunner, Alyson Fouse, became one of the best strike historians during our crazy hot strike summer and fall. You should check out her Instagram videos. They caught all the joy, mayhem and comedic shenanigans on numerous lots — especially Radford. That hidden gem of a strike location was a vibe!
The whole strike experience was a vibe in a myriad of ways. But mainly because of the bonding we all were able to do as an industry of creatives across all guilds. It was a tough road, but that part of it will stay with me even as I grieve the loss of my favorite job.
Again, everybody lost something. But tomorrow is a new day, and I’m excited to see what’s coming for us all. Onward always!
Before “Act Your Age,” Emmy-nominated actress Yvette Nicole Brown was on “Community,” “The Mayor,” “Josh & Drake,” “The Odd Couple,” among others.